Enterprise litigation risk and risk taking

Heng Guo

Finance Research Letters, 2023, vol. 58, issue PA

Abstract: As a significant uncertainty in business operations, litigation risk negatively impacts corporate reputation and increases corporates' risk-taking. This paper explores the impact of litigation risk on corporate risk-taking. The study finds that: the more significant the amount of litigation involved and the higher the litigation risk, the greater the corporate risk-taking; the higher the analyst concern, the smaller the role of corporate litigation risk in enhancing corporate risk-taking; and the mediation test finds that firms with higher litigation risk can increase corporate financing constraints and negatively affect corporate risk-taking.

Keywords: Litigation risk; Corporate risk-taking; Analyst attention; Financing constraints (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323003975

DOI: 10.1016/j.frl.2023.104025

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